TRAVEL WEEKLY BUSINESS
BUDGET: Government pledges to review business rates but not APD. IAN TAYLOR reports
IMPACT ON TRAVEL: BUDGET LARGELY OVERLOOKS TRAVEL BUT APD SET TO RISE
Chancellor George Osborne made no mention of Air Passenger Duty in last week’s Budget, but Treasury documents confirm APD will rise at the rate of the Retail Prices Index (RPI) from April next year. Changes to APD this spring, already announced, will result in the overall tax take from the duty falling by about £250 million a year. But the Treasury expects to raise £3.9 billion a year in APD by 2019, up from £3.2 billion in the 12 months to this April. RPI inflation is consistently higher than the official Consumer Price Index (CPI) and is seldom used by the government. The RPI rate in January was 0.5% against
a CPI rate of 0.3%. The chancellor made few references to
travel in the Budget. He promised “new investment in transport infrastructure for London”, “a comprehensive transport strategy for the north” and “over £7 billion of transport investment” for the southwest. A review of business rates and a cut in corporation tax to 20% were calculated to please business, and the chancellor appealed to households with a freeze on fuel duty and a rise in the personal tax allowance. Osborne said a so-called ‘Google
Tax’ on companies seeking to avoid taxes by registering overseas would apply from next month.
George Osborne His pledge to “ensure Britain is the global
centre for the sharing economy” could have repercussions for sections of the industry. Budget documents state the government’s intention to “enable government employees to use sharing- economy solutions to book accommodation and transport when travelling on official business”. APD will be charged at two
rates rather than four from next week, with a short-haul economy
rate of £13 and £71 for medium and long- haul flights from April 1. Children under 14 will not be subject to APD from May 1.
APD: ABTA RUES FAILURE TO REVIEW PASSENGER DUTY
Industry bodies expressed disappointment at the chancellor’s failure to review APD. However, Abta welcomed the business- friendly measures in the Budget. Abta chief executive Mark Tanzer
(pictured) said: “The review of business rates will provide a welcome opportunity to overhaul an outdated and expensive regime.” On APD, he noted: “The government’s commitment to look at the negative impact
COMMENT
By STEPHEN D’ALFONSO, head of public affairs, Abta
WE MUST MAKE CASE
FOR TOURISM – NOW George Osborne’s Budget statement was the opening shot in the election campaign. It included some announcements of interest to the industry. The review of business rates – due in time for the 2016 Budget – provides an opportunity to overhaul an outdated and expensive regime, and Abta will engage closely with this to present the views of members. Other measures, such as investment in
transport infrastructure and tax changes, will be welcomed by many businesses and employees. After two recent wins on APD, it’s disappointing that the government announced an inflationary increase. However, with devolution putting pressure on the Treasury to acknowledge the damaging impact of APD and the promise of a discussion paper following the election, the campaign for a fairer tax on flying must maintain the momentum. A major opportunity looms after the election. As an industry, we must ensure the next government does not apply a patchwork solution that fails to address the root of the problem.
l Join Abta’s #ValueTourism campaign to make the case to election candidates on why they should support tourism, at
abta.com/electionhub
of devolved APD on England is a chance to highlight the tax’s damaging impact.” Darren Caplan, chief executive of the Airport Operators Association, argued: “UK levels of APD continue to act as a barrier to tourism, trade and investment. The overall rate of APD keeps increasing.” British Air Transport Association chief executive Nathan Stower agreed, saying: “The government has missed an opportunity to set a new course on APD.” Tax specialist Kal Siddique, partner at
accountancy firm EY, said: “APD is a hugely efficient revenue raiser for the Treasury, administered by less than eight people in HM Revenue & Customs.”
26 March 2015 —
travelweekly.co.uk • 95
£3.9bn The amount the
Treasury expects to raise a year in APD by 2019
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